Drought Impact on 2013 Crop Insurance

Published: September 13, 2012

To add insult to injury, the drought’s effects on this year’s yields will affect next year’s insurance. Low yields reduce your Actual Production History (APH) yields that determines your level of protection.

Low yields in 2012 will reduce 2013 APH yields on many farms. However, there are two factors that could potentially reduce the size of the APH yield declines. The first is that that a producer can request to have any yield in the yield history replaced by 60% of the T yield. The T yield is specific to a crop in a county. Table 1 shows 2012 non-irrigated corn, soybean and grain sorghum T yields for Missouri counties. In 2012, some farms will have yields below 60% of the T yield. These farmers should request to have their actual yield replaced by 60% of the T yield.

To illustrate, take a farm in Saline County where the T yield for corn is 154 bushels per acre (see Table 1). If the farm has a yield below 92.4 bushels (154 bushel T yield x 60%), that farm could ask to have its actual yield replaced by 92.4 bushels per acre. This substitution will limit yield declines.

Take a Saline County farm with a 10-year yield history where the historic yields exactly equal the county averages in each year. This farm would have had a 2012 APH yield of 154 bushels per acre. If this farm has a yield below 92.4 bushel yield in 2012, a 92.4 bushels yield could be used in the APH yield calculation, resulting in an a 2013 APH yield of 148 bushels per acre. This farm’s APH will decline by 6 bushels between 2012 and 2013. Using a lower actual yield than 60% of the t yield would result in more of an APH yield decrease.

The second factor limiting APH yield declines is that there is 10% limit on a decline in the APH yield from one year to the next. Take the Saline County farm with a 2012 APH yield of 154 bushels per acre. The 2013 cannot be below 138.6 bushels per acre (154 APH yield x 90%).

While APH yields will decline, the Trend-Adjustment Endorsement will be available in 2013. This endorsement will act to increase yields used in guarantee calculations in the recognition that average corn and soybeans yields have increased over time.

Note: this is an adaption for Missouri of an article written by Gary Schnickey of the University of Illinois